What's Treasury planning for Lehman?

A Lehman Brothers sign at the company's annex office in New York City. - Chris Hondros/Getty Images

TEXT OF STORY

KAI RYSSDAL: I was kidding, of course, about Henry Paulson's daybook a minute ago. It's not like he'd write it down if he was gonna intervene in the markets. The Treasury Secretary hasn't actually said anything in public yet. But on the theory that actions sometimes speak louder than words, it's worth a mention that so far Mr. Paulson hasn't lifted a finger to help Lehman. We asked Marketplace's Jeremy Hobson to find out why not.

JEREMY HOBSON: If Treasury does not step in and bail out Lehman, it may just be because of bad timing, says Charles Gabriel, managing director of Washington-based Capital Alpha Partners.

CHARLES GABRIEL: The real issue is that, of course, we're less than two months out from the elections. On one hand, I'm sure that there are those who would like to see, and would applaud, the Treasury Department allowing Lehman Brothers to fail, but it would be a heck of a message and probably a very, very traumatic event.

There is a big difference between this and the Bear Stearns disaster. In that case investors were caught off guard. But Wall Street's been aware of Lehman's troubles for some time. Which is why the company's stock history over the last year looks like a weight graph for someone on a really successful diet.

So this time, says Quincy Crosby, chief investment strategist at the Hartford . . .

QUINCY CROSBY: The government has gotten into the matchmaking business because that's really what the market would prefer.

Crosby says Treasury wants to see if Wall Street is ready to handle a bargain-basement sale on a major investment bank.

CROSBY: You know, there's an old saying: "Where's liquidity when you need it?" And what we're waiting for is to see if buyers will step in. That's going to give confidence, lend confidence, to the market over all.

At today's stock price, Lehman looks dirt cheap. But buyers may still regard it as too risky. Washington's worry is that Lehman's failure could ripple throughout the world. So Crosby says a Treasury bailout is still a real possibility.

In other words, this may be another one of those weekends.

In New York, I'm Jeremy Hobson for Marketplace.

RYSSDAL: A pronounciation note while we have a second, here. Is it Lay-man or Lee-man? We're pretty sure we're right with Lee-man but we called them up just to check.